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The global outbreak of the latest Coronavirus (COVID-19) at the beginning of this year caught many businesses and governments off guard. The global pandemic which to date has claimed the lives of over 347,106 people globally had brought businesses to a complete halt.
The manufacturing industry especially has found itself amidst a whole new crisis as their supply chains get affected.
The Organization for Economic Co-operation and Development recently warned that the coronavirus could cut the global economic growth in half, with industries across the globe facing a fallout. As recent data from Dun & Bradstreet shows that services, wholesale, manufacturing, and retail account for more than 75 percent of businesses in the impacted region of China, while 51,000 companies globally have "one or more direct or Tier 1 supplier," from the impacted region and an additional five million companies have Tier 2 suppliers there, with 938 of those being Fortune 1000 companies.
"This means that the global outbreak has a two-fold impact on supply chains," says Pupel, a Business Intelligence solutions expert specializing in Supply Chain and Procurement. She also explained that in such situations, companies need to closely monitor their long-term and short-term demand and inventory to mitigate the impacts on the loss of production that could lead to the closure of factories and an imminent economic slowdown.
IMPORTANCE OF REAL-TIME DATA
The main problem that a lot of companies are facing today is that they are not using real-time analytics on their supply chain, which is why the response on their end has been pretty slow.
"If you know exactly how much supplies you have in your inventory and the real-time data on your suppliers, then planning for a crisis situation becomes much easier,"
she said while pointing out that companies using real-time data had a small window to plan out a strategy to mitigate the risks that they could face in the upcoming months during the crisis.
Pupel who has successfully helped companies manage their supply chain data for the last 8 years believe that using real-time data gives companies a unique edge as it provides them with- real-time true predictive insight into future cost and performance based on current ( and not just historical) trends.
Hence real-time data will allow organizations to map out their suppliers and create contingency plans to mitigate the supply shock.
MAPPING OUT SUPPLIERS
At times like these, it is extremely important to know who and where your suppliers are located. If you find that your suppliers are located in areas that are under lockdown or quarantine, start checking your inventory out and make a list of raw or direct materials you will require in the coming months.
"This information can be used to plan your production line, on the basis if the stock is available in the inventory," says the BI expert who led the Platform Business Intelligence team at Ivalua, while it became the French Unicorn valued at more than US$1 billion.
Pupel who is also the founder of Pure.metrics further points out that proper knowledge of how much stock one has gives us an idea of which supplies to order first and what to produce to keep the production from coming to a complete halt.
CREATING A CONTINGENCY PLAN
Pupel who strongly believes that having real-time data enables companies to come up with a contingency plan indicates that companies should be prepared for the best as well as the worst-case scenarios. She further stated that organizations will have to sit down and plan out scenario-based strategies. " Businesses should have to have plans for both an optimistic and conservative scenario."
The optimistic plan or the best-case scenario in her opinion would be if governments can contain the virus within April and May and economic activities resume within the second quarter of the year. While the conservative plan or the worst-case scenario that companies should be prepared for is the failure to contain the outbreak and it remains prevalent through the fourth quarter of the year.
According to her, the plans should be directed towards mitigating the supply shock, managing demand volatility, making the work area safe for workers. "Such plans will enable companies to take the necessary steps they need to, to ensure that the company does not feel the full blow of the economic slump down caused by the global pandemic," she said.
LESSENING THE SUPPLY SHOCK
At times like these, experts believe that companies should continue to work with their existing suppliers to ensure business continuity, while at the same time look for new suppliers within the region or country to diversify the supply chain and safeguard themselves in times of shortages.
Pupel, who has been working in Data Analytics and Business Intelligence for nearly a decade now helping fortune 500 companies build their KPI and metrics for procurement and supply chain, explains that this will allow businesses to prioritize on what products to produce in the event of an inventory shortage of raw and direct materials, especially in cases where a component or part may be used in an array of finished goods.
"It's all about knowing what you have in the inventory and producing what you are capable of building, while at the same time ensuring that you do not run out of or use parts you are at high risk of running out of before you find a new supplier and new supplies start coming through," she said.
To sum it all up she stated that although events like these cannot be predicted by understanding the supply chain, the risks and opportunities give companies the information they require to plan and mitigate the chances of a complete halt on production.